India VIX: Fear gauge zooms 33% as investors lose Rs 30 lakh crore to Middle East crisis—Should you worry?

The stock markets continued to remain volatile amid ongoing geopolitical tensions between the US and Iran and sustained pressure from elevated crude oil prices.

Market volatility surged sharply as the Nifty VIX, often called the fear gauge, rose to 22.80. The India VIX has increased from 17.13 on March 2 to 22.80 at present, a rise of 5.67 points or about 33.1 per cent since the start of the war.

It rose 21.79 per cent in a single session, 69.41 per cent in the past month, and 148.12 per cent year-to-date, indicating rising uncertainty in the market.

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Indices have fallen 7.5% since the conflict began

Since the beginning of the Iran-Israel conflict on March 2, benchmark indices have seen a sharp correction. The Nifty 50 has fallen from 24,865.70 to 23,002.15, marking a decline of 1,863.55 points or about 7.5 per cent.

The Sensex has dropped from 80,238 to 74,207.24, a fall of 6,030.76 points or about 7.5 per cent over the same period.

In today’s session alone, both major indices fell 3.26 per cent, adding to the recent pressure on equities.

Year-to-date correction deepens across markets and sectors

On a year-to-date basis, Indian equities have seen a broad-based correction. The Sensex has declined by 10,981.36 points or 12.89 per cent to 74,207.24 levels.

The Nifty 50 has fallen by 3,144.40 points or 12.03 per cent to 23,002.15. The Bank Nifty has slipped by 6,260.55 points or 10.48 per cent to 53,451.00.

Among sectoral indices, Nifty Auto has seen the steepest fall, declining 3,970.65 points or 13.94 per cent during the period.

Market capitalisation erodes by Rs 30.77 lakh crore

The correction in equities has also led to a sharp erosion in investor wealth. BSE-listed companies have seen their total market capitalisation fall significantly since March 2.

Market capitalisation stood at Rs 4,56,90,693.19 crore at the start of the period. It has now declined to Rs 4,26,13,557.95 crore. This reflects a fall of about Rs 30.77 lakh crore over the period, highlighting the impact of sustained selling pressure in the market.

Experts say markets adjust to geopolitical shocks over time

Market experts said uncertainty has kept investor sentiment cautious, though much of the immediate negative news flow may already be factored into prices.

Prashant Khemka, Founder of White Oak Capital Management, said it is difficult to predict the exact outcome of geopolitical conflicts, but markets tend to adjust over time.

He said, “It is very difficult to say what will happen in the war. However, markets often absorb such events beyond a certain point unless there is a major structural shock.”

He added that in past global crises, including the Russia-Ukraine war, markets initially reacted negatively but later stabilised and recovered once panic eased. According to him, markets tend to price in risks in advance and adjust accordingly.

Oil prices, sector outlook and investment strategy in focus

Experts said crude oil prices and global supply disruptions remain key risks for markets. However, they also noted that investors often overestimate short-term panic while markets focus on medium- to long-term earnings growth.

On sector strategy, Prashant Khemka said financials continue to offer strong investment opportunities due to structural growth. He also highlighted consumption and healthcare as consistent long-term themes.

On defence, he said the sector has gained strong global momentum and is likely to remain structurally strong for the next 10 to 20 years, supported by rising defence spending and domestic manufacturing trends.

In the IT sector, he said, uncertainty remains high, and investors should avoid extreme positions. However, he added that several IT companies have historically delivered strong returns even after corrections. He noted that midcap IT companies with strong execution may currently offer better opportunities compared to large-cap peers.

On portfolio strategy, he said he prefers being fully invested over holding large cash positions, as long-term equity allocation can generate meaningful returns over time. He also suggested healthcare-focused and diversified equity funds, such as flexi-cap and multicap funds, as suitable options in the current environment.